Debit Card and
Credit Card Blocking
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Have you ever been told you
were over your credit card limit, or had your debit card
declined, even though you knew you had available credit,
or money in your bank account?
If you have, then this
problem could have been due to card
"blocking."
Credit card or debit card blocking sometimes occurs in
situations when you use a credit or debit card to check
into a hotel or to rent a car.
Often, the clerk contacts
the company that issued your card to give an estimated
total. If the transaction is approved, your available
credit (credit card) or the balance in your bank account
(debit card) is reduced by this amount. That's a
"block." Some companies also call this placing
a "hold" on those amounts.
Here's how it works: Suppose you use a credit or debit
card when you check into a $100-a-night hotel for five
nights. At least $500 would likely be blocked. In
addition, hotels and rental car companies often add
anticipated charges for "incidentals" like
food, beverages, or gasoline to the blocked amount.
These incidental amounts can vary widely among
merchants.
If you pay your bill with the same card you used when
you checked in, the final charge on your credit card, or
final amount on your debit card, probably will replace
the block in a day or two.
However, if you pay your
bill with a different card, or with cash or a check, the
company that issued the card you used at check-in might
hold the block for up to 15 days after you've checked
out. That's because they weren't notified of the final
payment and didn't know you paid another way.
Blocking is used to make sure you don't exceed your
credit line (credit card) or overdraw your bank account
(debit card) before checking out of a hotel or returning
a rental car, leaving the merchant unpaid.
Blocking is sometimes also
used by restaurants for anticipated sizeable bills (like
large groups at dinner or a party), by companies
cleaning your home, and other businesses to ensure
credit or account money will be available to complete
payment.
If you're nowhere near your credit limit or don't have a
low balance in your bank account, blocking probably
won't be a problem. But if you're reaching that point,
be careful.
Not only can it be
embarrassing to have your card declined, it also can be
inconvenient, especially if you have an emergency
purchase and insufficient credit or money in your bank
account. On debit cards, depending on the balance in
your bank account, blocking could lead to charges for
insufficient funds while the block remains in place.
To avoid the aggravation that blocking can cause, follow
these tips:
-
When you check into a
hotel or rent a car - or if a restaurant or other
business asks for your card in advance of service -
ask if the company is "blocking," how much
will be blocked, how the amount is determined, and
how long the block remains in place.
-
Consider paying hotel,
motel, rental car, or other "blocked"
bills with the same credit or debit card you used at
the beginning of the transaction. Ask the clerk when
the prior block will be removed.
-
If you pay with a
different card, by cash, or by check, remind the
clerk you're using a different form of payment and
ask them to remove the prior block promptly.
-
Ask your current debit
card issuer if they permit blocks, for how long, and
from what types of merchants.
-
In addition, if you are
considering a debit card, shop around. When
comparing credit and debit card offers, ask issuers
if they permit blocks, for how long, and from what
types of merchants. You may want to consider an
issuer that uses shorter blocks.
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